The finance ministry could consider taking over part of the railways’ pension liabilities to provide some relief at least until 2034-2035, Parliament’s Standing Committee on Railways said in its request for grants. , pointing out that “the railways are the only government department that meets its retirement income outlets”.

This (fiscal year 2035) is a year after which the new pension plan or NPS – a defined contribution plan – will begin to show results in lowering pension spending. Currently, pensions are paid under an older pension plan – a defined benefit plan.

The recommendation is a boost for the railways, which had to take out a Covid-19 resource shortfall loan of nearly 79,398 crore.

According to the report, the parliamentary committee wants the possibility of taking over at least part of the pension commitments of the railways by the Ministry of Finance, following the merger of the railways budget with the general budget, to be explored. in order to bring some relief to the railways at least until 2034-35.

Harder and harder

“The Committee notes that the credits allocated to the Pension Fund account represented almost a quarter of the total operating expenses of the Railways. In just one year, the funds allocated to the pension fund increased by 10%, from 48,350 crore yen in the revised estimate (RE) 2019-20 to 53,160 crore yen at the estimation stage. budget (BE 2020-21) ”, states the report. .

The Ministry of Railways has argued that it is becoming increasingly difficult to bear pension expenses from income, especially as social service obligations exceeded 50,000 crore in 2018-19. “The ministry’s constraints in this regard deserve special attention,” the report said.

The Committee had also questioned the railways about a lower use of capital spending in fiscal years 2018, 2019 and 2020. In this regard, the railways stated that this was mainly due to lower spending on segments. internal resources and extrabudgetary resources (EBR) capital expenditure.

“While the shortfall in the internal resources segment was due to a lower generation of internal resources resulting from the sharp increase in staff costs and pensions following the implementation of the seventh committee on remuneration and income from lower than expected traffic, the lower EBR expenditure was due to reduced market borrowing requirement projected by zone railways and lower investment in partnership projects. However, every effort would be made to achieve the investment target of BE 2020-21, ”Railways said according to the report.

Regarding the losses suffered by the railways in passenger services, allegedly due to social service obligations which include the pricing of tickets at below-cost fares, the commission said the railways should prudently rationalize “the fares of the railroad. freight and passengers ”.

“As transport demand is elastic in a competitive market, the Committee wishes the railways to be aware of the fact that any increase in tariffs must be limited to a certain limit depending on the competition from other modes of transport”, a- he added.

Profits from railroad freight activities are used to compensate for the loss of passenger transport and other accompanying services, which in turn negatively affects freight and passenger activities.

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